Danish governor sees further bank ‘resolutions' on the horizon

The governor of the National Bank of Denmark last week told the country's federation of mortgage lenders that he foresees further mergers "and perhaps resolution" of banks in the country, but said he believes the Danish banking sector's problems are now "manageable within the existing framework".

Governor Nils Bernstein also addressed questions pertaining more directly to the housing market and mortgage lending, arguing that "more appropriate housing taxes" would help to "dampen fluctuations in the market". He called specifically for a freeze in the rate of property value taxation, rather than freezing the tax in nominal terms.

He said the country's mortgage providers will have to make a "huge effort" to address four specific challenges: reducing refinancing risk; meeting the need for any top-up collateral "before it becomes relevant"; dampening the pro-cyclical impact of home financing; and reducing the vulnerability of homeowners to extraordinary changes in financing conditions.

However, he said he sees "no urgent need for further specific legislation in these areas", commending the sector for "seriously addressing the challenges yourselves".